Generative AI Exclusion in Texas
A generative AI exclusion is an insurance policy provision that removes or restricts coverage for specified loss, liability, or claims associated with the development, deployment, operation, or use of generative artificial intelligence systems.
Definition
A generative AI exclusion is policy language that establishes a coverage boundary for loss or liability connected to generative artificial intelligence. Generative artificial intelligence generally refers to computational systems capable of producing new content, including text, images, audio, video, software code, or other outputs in response to supplied data, instructions, prompts, or learned patterns.
The scope of the exclusion is determined by its actual wording. An exclusion may address the use of generative AI broadly or may be limited to particular activities, technologies, outputs, causes of loss, categories of information, or forms of liability. Its operation therefore depends on the relationship between the excluded language, the policy’s insuring agreements, definitions, conditions, endorsements, and other exclusions.
Structural Components
A generative AI exclusion may contain several structural elements that establish the extent of the coverage restriction:
- Defined technology: Language identifying generative artificial intelligence, artificial intelligence systems, machine-learning systems, large language models, or other specified technologies.
- Excluded activity: Language identifying development, training, deployment, hosting, operation, reliance upon, distribution, or use of the covered technology.
- Causal wording: Terms such as arising out of, based upon, attributable to, resulting from, or otherwise connected with the identified activity.
- Excluded loss or liability: The categories of damages, claims, costs, injury, data-related loss, intellectual-property allegations, professional liability, or other exposures subject to the restriction.
- Exceptions or carve-backs: Language restoring specified coverage that would otherwise fall within the exclusion.
- Endorsement interaction: Modifications that add, remove, narrow, or expand the exclusion relative to the underlying policy form.
Parameters & Conditions
The operation of a generative AI exclusion depends on the wording of the particular policy and the factual relationship between the claimed loss and the excluded technology or activity. The presence of generative AI within an organization or workflow does not, by itself, establish that every related loss falls within the exclusion.
Relevant parameters may include whether generative AI was developed internally or supplied by a third party, whether it directly produced the disputed output, whether the insured relied on that output, whether protected or confidential information was processed through the system, and whether another covered cause contributed to the loss.
The exclusion may appear in cyber liability, professional liability, errors and omissions, media liability, technology liability, or other forms containing exposures that can intersect with artificial intelligence. Applicable policy-form regulation and governing law may also affect interpretation of the exclusion.
Topic Relationships
Exceptions, Limitations & Boundaries
A generative AI exclusion does not have a single standardized scope across all insurance policies. Different forms may define artificial intelligence differently, use different causal standards, restrict different categories of loss, or contain different exceptions.
The exclusion is distinct from a general cyber exclusion, intellectual-property exclusion, professional-services exclusion, privacy exclusion, or data exclusion even when those provisions may apply to some of the same facts. Multiple exclusions may operate independently or concurrently within the same policy.
The existence of an exclusion also does not establish that a particular claim is excluded without consideration of the applicable insuring agreement, definitions, endorsements, factual allegations, causation, and governing policy-interpretation rules.
Generative AI Exclusion in Texas: Definitional FAQ
It is policy language that excludes or restricts specified insurance coverage for loss or liability connected to defined generative artificial intelligence technologies or activities.
No. Scope depends on the policy’s definitions, causal wording, excluded activities, categories of loss, exceptions, and related endorsements.
No. A generative AI exclusion specifically addresses defined artificial-intelligence-related exposures, while a cyber exclusion addresses separately defined cyber risks, although the two provisions may overlap in particular circumstances.
Yes. Policy language may contain carve-backs or other provisions that preserve specified coverage otherwise within the exclusion’s general scope.